Input-Output (I-O) tables show the structure of a country's entire production system for a particular period, usually one year. They show which goods and services are produced by each industry and how they are used (e.g. some goods, such as cars, are sold to final consumers while others, such as steel, are used as inputs by other industries in producing more goods and services). The tables are based on the principle that the value of the output of each industry can be expressed as the sum of the values of all the inputs to that industry. These inputs include the use of the outputs of other industries; any profits made from production; compensation of employees; and any taxes on production paid less any subsidies received. All the goods and services produced in a period are identified as being used as inputs by industries in their production process, being sold to final users of the goods and services (either in Australia, or overseas as exports), or contributing to the changes in inventories (an increase in inventories if more goods are produced than purchased, or a run-down in inventories if purchases exceed production). The net increase in inventories includes any timing difference between supply and use.

Relationship to the national income and expenditure accounts

I-O tables are directly related to the GDP account. The income side of the GDP account shows the amount of income generated in the economy accruing to labour (in the form of compensation of employees) and to capital (as profits or, in national accounting terms, gross operating surplus and gross mixed income - the latter including some return to owners of businesses for their labour). The expenditure side of the account shows the value of goods and services entering into the various categories of final uses.

The I-O tables provide a much more detailed disaggregation of the GDP account than is available in the national income, expenditure and product accounts. The latter only shows details of the end results of economic activity, whereas the I-O tables show the flows of goods and services through the production process. The extra detail provided by the I-O tables is essential for many analyses.

I-O table for seven industry sectors

Table 29.23 and diagram 29.24 show the flows of goods and services in respect of 1996-97.

The links between the table and the diagram are explained by working through the following formulae.

Total intermediate use - ($482,483m) in the diagram is derived by summing from column 8 of the table: intermediate use ($412,134m); taxes on products, net ($13,378m); competing imports ($56,890m); and complementary imports ($81m).

Domestic final use - ($530,600m) in the diagram is derived from the table by subtracting total exports ($105,160m), column 12, from total final uses ($635,760m), column 13.

Imports - ($103,590m) is derived by summing from column 14 of the table: competing imports ($103,257m); and complementary imports ($333m). In the diagram it is dissected into imports for intermediate uses ($56,971m); and imports for final uses ($46,619m).

Exports - ($105,160m) in the diagram is total exports, column 12 in the table.

Total use - ($1,118,243m), which equals total supply, is the sum of domestic final use ($530,600m); total intermediate use ($482,483m); and exports ($105,160m).

Gross value added - ($493,377m) in the diagram is derived by summing from column 14 of the table: compensation of employees ($257,193m); gross operating surplus and mixed income ($213,534m); and other taxes on production (net) ($22,650m).

GDP (income measure) - ($532,170m) in the diagram is derived by summing from column 14 of the table: compensation of employees ($257,193m); gross operating surplus and mixed income ($213,534m); taxes on products (net) ($38,793m); and other taxes on production (net) ($22,650m).

GDP (expenditure measure) - ($532,170m) in the diagram is derived by summing domestic final use ($530,600m); and exports ($105,160m); and subtracting imports ($103,590m).

29.24 THE AUSTRALIAN ECONOMY, Flow of goods and services - 1996-97Source: Australian National Accounts: Input-Output Tables, 1996-97 (5209.0).

Notes:(1) Flows are based on 1996-97 input-output tables.(2) This diagram shows the flows between producers and the rest of the economy. In this context a producer can also be a consumer (e.g. own account capital expenditure) or an investor.(3) The shaded areas identify the components that make up the main aggregates. Flows passing through the shaded areas are included in the calculation.

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